Private sector development

 

“Private sector is the engine of innovation, investment, growth and a major contributor to job creation and poverty reduction. GoIRA¹’s  vision for Afghanistan rests on a model of socially responsible market economy in which a capable and thriving private sector leads the economic growth process, creates job opportunities, contributes to poverty reduction and gradually reduces reliance on foreign aid.”

ANPDF II 2021-2025

Market Building

 

Since 2009, in line with the Afghan national development policies, specifically with the Private Sector Development - National Priority Program (NPP), the Italian government, through the Italian Agency for Development Cooperation (AICS), promotes the development and the strengthening of the Private Sector.

As highlighted in the Afghanistan National Peace and Development Framework (ANPDF II) 2021 to 2025, private sector development appears the key to the complete self-reliance of the country. If complementary to peace-building, state-building, the first two broad objectives of the strategy, it is pivotal for the market-building, the third pillar of the ANPDF II.

Afghanistan recognizes the role of the private sector in leading the economic growth process, creating job opportunities, also for women, contributing to poverty reduction and gradually enhancing the country self-reliance. The Private Sector Development NPP, in fact, aims at increasing foreign investments, growth of small-medium enterprises and exporting production, public-private partnerships and financial sector privatization. In a socioeconomic not stabilized context, without accelerated reforms and an improved security situation, growth is likely to remain slow with limited progress in reducing poverty from current very high levels, and these explain how crucial it is to invest and to expand the private sector.

AICS manages a Private Sector portfolio of 10.2 MEUR, with two bilateral programs:

ISAME -"Italian Support for Microfinance and Enterprises in Afghanistan", implemented by the Microfinance Investment Support Facility for Afghanistan (MISFA) and NATEJA -"Non-formal Approach to Education and Work in Afghanistan", implemented by the Ministry of Labor and Social Affairs – National Skills Development Program. These projects started respectively in 2011 and 2015. ISAME was completed in 2018, while NATEJA is now at the completion stage. These interventions aimed at strengthening microfinance institutions in Afghanistan, enhancing their financial sustainability and boost the micro, small and medium enterprises in the trade, services and manufacturing sectors, alleviating extreme poverty among the vulnerable population, create employment and assist young women in starting small businesses in the Provinces of Herat, Farah, Bamiyan, and in Kabul.

 

 

¹ Government of Islamic Republic of Afghanistan